Right Thinking from the Left Coast

Tag: IRS

The Justice Department won’t charge Lois Lerner, a former Internal Revenue Service official, over Tea Party groups’ applications for tax-exempt status, closing a nearly 2 1/2-year investigation with a determination that IRS officials bungled the matter but committed no crimes.

“Our investigation uncovered substantial evidence of mismanagement, poor judgment and institutional inertia, leading to the belief by many tax-exempt applicants that the IRS targeted them based on their political viewpoints,” Assistant Attorney General Peter Kadzik wrote to Congress on Friday. “But poor management is not a crime.”

The announcement ends a major phase of the IRS controversy, angering Republicans and Tea Party activists who had pressed for prosecutions.

I guess it’s no surprise that the Obama Administration’s DOJ’s investigation cleared the Obama Administration’s IRS. But it’s important to note what the report does not say. It does not say that conservative organizations weren’t targeted. It merely concludes that this targeting was the result of incompetence rather than the result of criminal conspiracy.

The report is short. They interviewed a ton of people, looked over a few hundred thousand documents but could not find a smoking gun that indicated a deliberate political targeting of conservative organizations. What they did identify was a bumbling incompetent organization that took various shortcuts to do their job that resulted in targeting of political organizations.

(I’m not a big believer in conspiracy theories for precisely this reason: government is too incompetent to organize a proper conspiracy. As Dave Barry once said regarding the supposed Roswell aliens:

It`s not that I don`t believe the government would TRY to hide dead aliens; it`s that I don`t think the government would SUCCEED, since every time the government tries to do anything secretly, as in the Iran-contra arms deal, it winds up displaying all the finesse and stealth of an exploding cigar at a state funeral. If there really WERE dead aliens, I figure, there also would be daily leaks about it from High Level Officials and huge arguments among influential congresspersons over whose district the multimillion-dollar Federal Dead Alien Storage Facility would be located in.

The Obama Administration is not exactly known for their airtight conspiring.)

The report notes that Lerner took action in stopping this. But her actions came very late in the game and could have come much earlier had she been properly supervising her agency. That’s … not exactly an exoneration. They also note that they found no evidence that she deliberately crashed her hard drive, destroying thousands of documents. That’s … not exactly an exoneration either. So even on its own terms, this report isn’t exactly a ringing endorsement of Lerner or the IRS.

But I’m not seeing why we should take this on its own terms, really. Its main conclusion is that no IRS employees would go on record saying there was political targeting and that no documentation they saw drew this conclusion. It takes a lot of pride in noting that some of the IRS employees it interviewed were critical of Lerner or openly admitted to being Republicans. It’s almost overboard in its effort to portray itself as fair. But this crosses me as a very surface-level investigation.

Furthermore, the conclusions are very caged in the inability to prove criminal intent. I’m not in favor of bringing charges that ruin people’s lives when there is no hope of conviction. But I should note that this standard is usually not applied to civilians. If you fail to pay your taxes, the IRS won’t let you off the hook because there’s no evidence you did it on purpose. And they certainly won’t accept that your hard drive mysteriously crashed. That would bring an obstruction charge.

I’m also reminded of the mantra that it’s not the crime that ruins politicians, it’s the cover-up. The IRS played smart here, granting unfettered access to their employees and documents (apart from the hard drive that mysteriously crashed). By not overtly obstructing justice, they kept themselves clear of criminal charges.

So in the end, this report can be summed up as, “The IRS cooperated and we didn’t any convincing evidence of criminal activity. It looks more incompetence to us.”

Rasmussen has a poll that asked people if they bought Obama’s most recent attempt to hide the fact that under his administration the IRS conveniently targeted his political opponents right before an election, and the sad thing is that the result was that only 52% of likely US voters believe that this was highly illegal and a directed political attack. I suspect that amongst the democrat voting block there are two issues that drive this number. The first that these democrat voters are predominantly low information voters: they get their news from comedians or DNC apparatchiks like the NYT or PSMNBC, which pretend to be doing unbiased news, but are nothing but shills for the DNC. But I suspect that there is also a large block that know this was illegal and a dangerous abuse of power they would never, ever, have gone along with, but they don’t care to admit that now, because it benefited their guy and their side.

These idiots are the ones that make totalitarian systems possible. They are fine with abuses of power and law breaking as long as it is done by their guys – explained away as a necessary evil in their battle against the enemy – and never figure out that eventually they will be in the line of fire themselves until it is too late. One can forgive the low information voter. After all, stupid is as stupid does. But willfully ignoring criminal activity is another thing. And during the Obama term we sure as hell have seen some unbelievable abuses of power. From this IRS scandal to the things going on in the ME (Benghazi. Iran deal, and more), to the attack on Walker Hal posted about, these people have shown they operate like a criminal syndicate. And we as a country are all suffering for it. When the rule of law crumbles as it is doing now, sooner than later, you will get those that decide to take the law into their own hands.

Last October, in response to the outrage provoked by “structuring” cases in which the government took people’s money because their bank deposits were too small, the IRS said it would no longer do that unless there was evidence that the money came from an illegal source. In March the Justice Department announced a similar policy for seizures based on structuring, which entails making deposits of less than $10,000 with the intent of evading bank reporting requirements. Yet both the IRS and the DOJ are continuing to pursue the forfeiture of $107,000 that belongs to Lyndon McLellan, the owner of a convenience store in rural North Carolina, based on nothing but suspicion of structuring.

As in other structuring cases, McLellan lost his money because of well-intentioned but bad advice from a bank teller. The teller told McLellan’s niece, who usually handled L&M Convenience Mart’s deposits, she could save the bank burdensome paperwork by keeping the deposits below $10,000, the reporting threshold. Based on the resulting pattern of deposits, the IRS cleaned out McLellan’s bank account a year ago, even though there was no evidence that the money came from anything other than his perfectly legal business, which combines a store with a gas station and restaurant. The Institute for Justice, which is suing the IRS and the DOJ on McLellan’s behalf, notes that “the government filed its forfeiture complaint in December 2014, two months after the IRS announced it would not forfeit money in cases like this one.”

Reminder: when Elliot Spitzer, who had prosecuted people for structuring, structured payments to his madam to avoid detection, he wasn’t punished at all. This law is frequently applied to people who can’t afford to fight it or make a ruckus. The only reason McLellan can fight this is because the IJ — one of the more singularly awesome organizations in the country — is fighting on his behalf.

It gets worse. North Carolina congressman George Holding grilled the IRS commissioner about this case. This pissed off the federal prosecutor. You see, the warrant is under seal by the court. Ostensibly, this is to “protect” the defendant but in reality it protects the government from having their scumbag behavior exposed (see here for where these seals have been used to silence Scott Walker supporters when they have been subjected to midnight raids and fishing expeditions to try to find some evidence … any evidence … of wrong-doing). Similar gag orders were used to try to silence the late Siobhan Reynolds when she opposed government efforts to crack down on pain-killer use.

Of course, when sealed records are leaked by prosecutors — such as when Barry Bond’s sealed testimony in the BALCO case was leaked — no one cares.

Anyway, the prosecutor’s response has to be read to be believed:

I’m a bit concerned. At your request, I provided you a copy of the application for seizure warrant, which remains under seal with the Court, and now it appears it has been made available to a congressional committee? I do not know who did that, and I am accusing no one, but it was not from our office and could only have come from your clients. That was certainly not my intent in making this available. My intent was for you and your clients to be able to actually know the facts so you could review them and have an intelligent discussion with me. Whoever made it public may serve their own interest but will not help this particular case.

Your client needs to resolve this or litigate it. But publicity about it doesn’t help. It just ratchets up feelings in the agency.

Not unreasonable. But … wait for it.

My offer is to return 50% of the money. The offer is good until March 30th COB.

In other words, “shut the hell up and we’ll give you back the half the money”. And remember, if it weren’t for the support he’s receiving from the IJ, this would likely be the best outcome for McClellan.

A few weeks ago, John Oliver — whose commentary I normally find funny and occasional insightful — defended the IRS. He pointed out, correctly, that they didn’t make the tax law so ridiculously byzantine and that they barely have the resources to deal with the ungodly mess Congress has handed to them. He pointed out that for every dollar we spend on the IRS, we get six back. I don’t find it particularly persuasive since that means more money extracted from our citizens (sometimes in error and frequently at the expense of people like McClellan, who can’t afford to fight).

But this illustrates perfectly why people hate the IRS and the prosecutorial machinery that surrounds them. This is an agency that once had “Seizure Fever — Catch It!” posters printed up. This is an agency that zealously uses the unconstitutional powers Congress gives them. This is an agency that has happily complied with Presidential requests for targeted political audits and harassment. And now it is an agency that lied about what they were doing, seized someone’s assets and threatened him when he went public with it.

So yeah, we need to burn the tax code down. Yes, we need to pass laws to stop asset forfeiture — it’s clear that we can’t rely on the agencies to do it on their own. But once we do that, we also need to tear down the IRS and replace it with something else. They are too used to using and abusing the power our Congress and our Courts have stupidly given them.